Macau’s Casinos once made more than 50 percent of their combined gross gaming revenue (GGR) from the lucrative VIP market segment who were happy to spend thousands of dollars at the casino tables during their gambling sprees. The majority of these high rollers were ferried from Mainland China and junket operators did great business by feeding the casinos a constant flow of high-rollers.
VIP Market Segment Recovery
Things have changed considerably in Macau since early 2014 when Beijing launched an anti-corruption crackdown targeting the casino industry and in particular the VIP marketing segment. The crackdown resulted in 26 months of GGR decline and also broke the back of the VIP market segment. The government eased up its anti-corruption operation towards the end of 2016 and Macau’s casinos began their slow recovery from August 2016.
There are some gaming analysts who believe that the worst is over in Macau and that the VIP gambling market is beginning to return to what it once was. Their beliefs are backed by the fact that some of the major operations in Macau such as the Las Vegas Sands Corp, Wynn Resorts and Galaxy Entertainment have reported an increase in VIP baccarat activity and a rise in VIP GGR.
Macau’s casinos generated GGR in March 2017 of 18 percent, its highest percentage during the last 8 months. The growth in revenues could be directly related to the surge in VIP GGR which went up by 25 percent. Francis Lui Yiu-tung, the vice chairman of the Galaxy Entertainment Group remains optimistic about the VIP market segment but says that it is too soon for anyone to be certain that the VIP market will recover and go back to what it once was.
Millenials Are The Future
Francis Lui Yiu-tung is the 6th richest man in Hong Kong and a gaming tycoon. He wants Galaxy Entertainment which owns the StarWorld Resorts and Broadway resorts in Macau to not pin their hopes entirely on the VIP marketing segment but instead come up with a new marketing plan that targets the elusive milllenials and offer them options that bring them to the casinos.
Lui stated that casinos have realized that millenials are a younger generation of gamers who do not want to play on traditional slot machines nor are they big on classic table games such as poker and blackjack. This generation of gamers are more technologically minded and prefer to use electronic devices such as their smartphones to keep playing on the go. The 61 year old Lui believes that the casinos need to take their gaming preferences into consideration and then work with software developers to create new games and services that attract millenials to Macau’s casinos.
Galaxy Entertainment has done very well in Macau during the last 12 months as the group has witnessed a 69 percent growth in share prices which has caused Lui’s family wealth to increase by as much as 40 percent. Galaxy Entertainment recorded one of the highest increases in revenue during the last 12 months as other gaming operators in the region such as Sands China recorded a 35 percent increase.
Government Policy Influencing VIP Growth
Lui says that one of the reasons why he is a little hesitant to fully back the VIP gambling market recovery is because he thinks that China’s liquidity and currency situation could have contributed to Macau’s casino industry recovery. In order to eliminate these outside possibility, Lui believes that it is important for a few more months to pass and then see if the VIP market has continued its recovery
The People’s Bank of China, which is China’s central bank has taken a number of steps during the last 12 months to bring in more liquidity to the interbank market and also to arrest capital outflow. Angela Han who works as an analyst with China Merchant Securities the steps taken by the reserve bank has worked well for Macau’s VIP market segment as money has become easier to access and spend. Han noted that this market segment has been influenced by policy changes and states that its future might be shaky given the fact that it is being influenced by government policy.

TightPoker Staff

TightPoker Staff

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